Stimulus resources saved for timely demand push: Principal economic adviser Sanjeev Sanyal

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October 23, 2020 6:30 AM

Now that many sectors of the economy are emerging out of the torpor caused by the lockdown, there is a case for a timely ‘generic’ push to demand to accelerate the economic revival, principal economic adviser Sanjeev Sanyal said on Thursday.

Ifo's survey is based on monthly responses from about 9,000 companies in various sectors.''We expect the September quarter growth to be at -7.8 per cent, better than -23.9 per cent in the June quarter. We also retain our previous forecast of -7.5 per cent growth in FY21,'' they said in a report on Wednesday.

Now that many sectors of the economy are emerging out of the torpor caused by the lockdown, there is a case for a timely ‘generic’ push to demand to accelerate the economic revival, principal economic adviser Sanjeev Sanyal said on Thursday.

“We were rather reticent to provide a large demand stimulus when we were in a lockdown. If we had used up all our resources in trying to push demand during the period (April-August), we won’t have had the resources to push it (now),” Sanyal said at CII event here.

Sanyal’s views, expressed a day after economic affairs secretary Tarun Bajaj said the economic activities would be spurred by clutch of steps, bolstered expectations of another larger stimulus by the government.

Bajaj had on Wednesday promised to extend production-linked incentive (PLI) schemes for more sectors, augment budgetary and PSU capital expenditure and several steps to catalyse investments in infrastructure sectors. “For imparting a generic push to demand, the time has come”, Sanyal said.  He also indicated some sectors that are still in the doldrums like hospitality would be given special attention.

“Clearly there are some specific issues with sectors like hospitality. These sectors may need special care..,” the principal economic adviser added. Sanyal said unlike many countries, which chose very large upfront demand creation, India’s approach was basically to focus on creating a safety net first for the poor and the vulnerable sections of society as well as businesses, mainly the small and medium ones.

“If we tried to re-inflate consumption demand during April-June, it would have been a waste of resources for the simple reason we ourselves have locked down all the avenues for spending,” he said.

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